Why do companies typically choose to implement layoffs affecting numerous employees rather than considering salary reductions for top executives like the CEO?
In: Economics
Because a reduction in the salary of top executives may cause those executives to depart the company which *may* worsen operating results as executives tend to be more difficult to replace in a timely fashion.
Also, replacing an executive generally does not save money as qualified executives tend to command premium compensation packages.
Shareholders talk to the board of directors; who hire executives to, well, execute business plans. Without executives, the BOD wouldn’t be able to run the business without turning into executives themselves.
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